Saudi Aramco Reports The Largest Profit of Any Publicly Traded Firm in The World as it Benefits From The Rising Price of Oil
With the help of rising oil prices and oil refining margins, Saudi Aramco, the world’s largest oil corporation, has announced its best quarterly profit since the business went public in 2019.
Aramco joins oil giants like Exxon Mobil and BP that have recently announced excellent or record-breaking earnings after Western sanctions on Russia, a major producer, constrained a market that was already undersupplied and led to an increase in the price of petroleum and natural gas.
The energy company, which is controlled by the Saudi government to a degree of over 94%, announced a record profit for the second quarter of the year of $48.39 billion.
This was nearly double the $25.43 billion that was made during the same time period in 2021 as a result of increasing oil prices and increased sales.
After receiving a huge windfall, Aramco announced intentions to pay a $18.8 billion dividend for the quarter, with the majority going to the nation’s government.
Amin Nasser, the CEO of Aramco, stated that the company anticipated that demand for oil would “continue to grow for the rest of the decade” despite recent efforts to reduce the use of fossil fuels globally.
Nasser, speaking to reporters on an earnings call, voiced concern over a lack of global investment in hydrocarbons that has led to “very limited” spare capacity.
“With the Covid restrictions in China easing up, that will add to the demand… the aviation industry will also add to the demand,” he said.
If the Saudi government requests it, he continued, Aramco is prepared to increase oil production to its maximum sustained capacity of 12 million barrels per day.
According to Aramco, its average daily output of all hydrocarbons was 13.6 million barrels of oil equivalent in the second quarter.
The company is working to increase production from multiple energy sources, including renewables and blue hydrogen as well as oil and gas, as it works on both energy security and climate goals, Nasser said.
Compared to the same period in 2021, capital spending climbed by 25% to $9.4 billion in the quarter. Aramco said that it kept making investments in expansion, growing its chemicals business, and creating opportunities in low-carbon industries.
Additionally, it is now researching business potential in the liquid-to-chemicals industry with an emphasis on the Asian market.
Exxon reported its highest quarterly profit ever in July with a net income of $17.9 billion, almost four times as much as the previous year. European powerhouses Shell and Total Energies also reaped the benefits of rising margins for producing fuels like gasoline and diesel.
There is “some expectation” that Aramco would float certain entities inside the corporation, according to Nasser, who also noted that the Saudi stock market, which is up 11% this year, is highly promising for corporate listings in the near future.
Aramco is attempting to combine its two energy trading divisions, with Aramco Trading Co. acquiring Motiva Trading, according to sources, in preparation for a prospective IPO.
As high energy costs threaten to cause public backlash, the oil giants are coming under increased political pressure as a result of the high profits. Exxon was “Making more money than God,” according to US President Joe Biden, earlier in June.
OPEC and its partners agreed to one of the lowest increases in oil production in the organization’s history earlier this month, with Saudi Arabia trying to placate its western friends without burning up its spare capacity.
Brent crude, the international benchmark, has decreased from $120 in June to around $98 on Friday (12th August). Shares of Saudi Aramco, which are traded on the Riyadh Stock Exchange, have increased by more than 25% this year. In 2019, the government listed 1.7% of the oil company’s shares.
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